Man Enterprise Sal v Al-Waddan Hotel Ltd

On an application under section 18 of the Arbitration Act 1996, the court should not determine underlying disputes about the contract or arbitration agreement. It should ask whether the applicant has a good arguable case that a valid arbitration agreement exists and that the contractual preconditions to arbitration have been satisfied. Where the appointment procedure has failed, the court may give directions or make the appointment itself. If the parties have not agreed the number of arbitrators, the tribunal is a sole arbitrator, who may be appointed by an appropriate arbitral institution.

MAN applied without opposition for the appointment of an arbitrator under section 18 of the Arbitration Act 1996. The parties’ 2007 construction contract incorporated FIDIC conditions and provided for arbitration seated in England under English law.

A dispute arose concerning unpaid sums. The Engineer declined to act, stating that its services had expired. MAN argued that the contract and arbitration clause remained operative and that the requirements of the contractual dispute procedure had been met. The defendant did not acknowledge service, file evidence or attend the hearing. The central issues were whether there was a good arguable case for a valid arbitration agreement and compliance with the contractual preconditions, and whether an arbitrator should be appointed.

1. Application granted. The court directed that the dispute be referred to a sole arbitrator appointed by the President or a Vice-President of the LCIA.
2. On an application to appoint an arbitrator, the court does not resolve underlying issues which should be determined by the tribunal, including whether a contract exists, whether it has been terminated, or which contract governs. The relevant threshold is whether there is a good arguable case that a valid arbitration agreement exists, following Noble Denton Middle East v Noble Denton International Ltd [2011] 1 Lloyd's Rep 387.
3. There was a good arguable case that the 1 April 2007 contract remained operative despite the alleged replacement contract. The contractual arbitration clause provided for arbitration in England under English arbitration law.
4. There was also a good arguable case that the contractual process had been satisfied. The Engineer’s letter could be treated as a decision. Alternatively, clause 67 might not apply where there was no Engineer, or the employer might be unable to rely on the absence of an Engineer’s decision where the Engineer was not acting.
5. Under sections 15(3) and 16(3) of the Arbitration Act 1996, the tribunal was to consist of a sole arbitrator and the parties were required jointly to appoint one. Their failure engaged section 18. The court therefore exercised its section 18(3) power to direct an appointment by the LCIA.